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Sunday, August 31, 2008

'Good initiatives for people but more can be done for REITs'

BUDGET 2009 is announced amid very challenging times in view of the rising food and energy costs.

The government has introduced various measures to help increase disposable income to mitigate the impact of the higher cost of living, thus demonstrating that it is a caring government.

Ngian Siew Siong Managing Director Sunway City Bhd (property development division)

* Enhancing training and skills programmes is a timely move by the government to attract more locals into the industry and avoid being too dependent on foreign labour.

However, the current incentive of giving 50 per cent waiver of the CIDB levy to encourage use of the Industrialised Building Systems (IBS) is inadequate.

We urge the government to seriously consider providing additional incentives.

* Reducing the withholding tax rate on real estate investment trust (REITs) for foreign institutional investors to 10 per cent from 20 per cent puts us on par with Singapore.

However, we are still not competitive as local and foreign corporations are still subject to 26 per cent tax compared with 18 per cent in Singapore.

As for domestic and foreign individuals and domestic institutions, we are still subject to 10 per cent tax. In Singapore, REITs are exempted from tax.

As such, more can be done to make Malaysia more competitive regionally where REITs are concerned.

* The benefit of the tax exemption on interest subsidy for housing loans by employers is insufficient, taking the market average of two per cent subsidy. To encourage home ownership, we prefer that mortgage interest be fully tax-deductible.

* While it is good that the government is putting more emphasis on greater use of renewable energy and energy efficiency, there could be more incentives for the local property industry to incorporate "green" building designs and construction.

This could be achieved by abolishing taxes and duties, not only for local but also imported materials and equipment such as low E glass (to reduce heat emission) and inverter air-conditioners (which regulate thermal power flow).

We applaud the government's efforts to promote use of renewable energy and energy-efficient products. However, we hope the government will extend further incentives to the property industry to promote green building designs for sustainable developments that reduce long-term operation and maintenance costs.

By New Straits Times

Capital market perks

SHARE prices of real estate investment trust (REITs) are likely to rise when market starts on Tuesday as investors may rush in after the government cut tax on dividends received by them.

Foreign funds especially will find Malaysian REITs a bit more attractive now that their withholding tax is halved to 10 per cent, as announced under the Budget 2009 yesterday.

Local retail investors will pay a smaller tax of 10 per cent on their REIT dividends, compared with 15 per cent previously.

Other measures aimed at boosting the capital market include a tax exemption on fees that local investment banks get from helping to list foreign companies or investment products on Bursa Malaysia.

Fees and profits earned by deal-makers from non-ringgit sukuks issued in Malaysia and distributed abroad will also be exempted from tax for three years.

Malayan Banking Bhd's president and CEO Datuk Seri Abdul Wahid Omar welcomed the tax incentives for promoting international sukuk issuance out of Malaysia.

"The incentive will encourage more capital market players to conduct, arrange and invest in Islamic non-ringgit issuance," concurred Standard Chartered Bank Malaysia's head of Islamic banking Azrulnizam Abdul Aziz.

Meanwhile, both Axis REIT Managers Bhd chief executive officer Stewart LaBrooy and Am ARA REIT Managers Sdn Bhd chief executive officer Lim Yoon Peng are convinced that investors will buy more shares of REITs, since their after-tax returns are now higher.

"Share prices of REITs have been depressed under the soft market, which pushed dividend yield to around 8.5 per cent to nine per cent. I believe many foreign investors will rush in on Tuesday morning to lock in this high yield," Lim said.

Chan Say Yeong, who manages Quill Capita Trust, said the reduction in withholding tax will make Malaysia REITs more attractive to investors, especially foreign pension funds that are looking for long-term investment.

A lower withholding tax of 10 per cent for foreign institutional investors puts us on par with Singapore, Sunway City Bhd managing director Ngian Siew Siong said.

However, Malaysia REITs are still not competitive as local and foreign corporations are subject to 26 per cent tax compared to 18 per cent in Singapore, Ngian said.

Retail investors and domestic institutions are also still subject to 10 per cent tax, whereas REITs are tax-exempt in Singapore.

Yesterday's move was a good start and a step towards the right direction, but more can be done to make Malaysian property trusts more competitive regionally, industry players concurred.

"The tax cut will create some excitements. But I'm a little disappointed that individual investors are still being taxed on their dividend. At a time when real interest rates have turned negative, their investment in REITs should be encouraged as an alternative for positive yields," LaBrooy said.

By New Straits Times (by Chong Pooi Koon)

Singapore properties remain much sought after

IN most economies, while land and buildings generally form a significant portion of national wealth, the situation is more acute in land scarce Singapore and Hong Kong.

Although Singapore offers a plethora of investment instruments, property continue to be a much sought after asset to have.

Says an observer: “The government wants every Singaporean to have a home. That is why we have HDB (Housing Development Board) homes for everyone. There are the lower end HDB apartments and the more expensive ones. Then there is private housing.”

Malaysians today make up the city state’s third largest investors, says a property consultant.

Be it by marriage or Malaysians seeking permanent resident status or economies, the two countries share close ties.

To appreciate the dramatic hike in Singapore’s property sector today, there is a need to go back a decade.

Says a Malaysian hotel owner: “A decade or more ago, I was offered a hotel in Singapore at S$180mil. Today, it has gone up to S$350mil. I’ve made some good moves, but I lost that one.”

In 1998, parts of Asia were grappling with the Asian financial crisis and sentiments were poor, as with today. Over in Malaysia, property prices were also tumbling after a heady 1995-96 era when prices peaked.

While Malaysian properties were hit by the credit crunch, the Singapore property sector rolled with a certain level of resilience. Then came the severe acute respiratory syndrome (SARS) and the good times came to an end. The pain was short and intense, on every front.

By early 2005, prices began to escalate again, says sdb Asia Pte Ltd sales and marketing executive Jean Tan.

At the end of 2005, the Singapore government announced the setting up of the integrated resorts with casinos on Marina Bay and Sentosa Island.

Investors sat up and began pouring money into Singapore real estate one year later, especially Orchard and the surrounding areas like Tanglin, Bukit Timah Road, known as district 9 and 10.

“In 2007, the en bloc sale of apartment units resulted in prices going overboard. What was bought for S$800,000 went up to S$1.3mil during that period,” she says.

Prices reach a peak in August/September 2007. The tumble came in December after the government did away with the deferred payment scheme.

The scheme essentially requires a buyer to pay 20% upfront on signing of the sales and purchase agreement and paying the remaining 80% on completion.

This was done away with and buyers took this negatively, says CB Richard Ellis team director Dave Peh. There were also the measures by the government to cut down on supply.

“But these are not the only reasons. The world is going through a global economic crisis. It may take longer to sell, unlike the time when all the units were sold in two weeks,” he says.

By The Star (by Thean Lee Cheng)

Jia is SDB’s first Singapore development

JIA. Short, simple and chic. The meaning is even more profound. It means home in Chinese. There is something within each of us that is drawn to a place called home. It does not have to be something at the upper end, although in this case, it is.

It is on this premise that SDB Properties Sdn Bhd, the property arm of Selangor Dredging Bhd, has named its first residential development in Singapore ... Jia. The project was launched about a month ago.

Located at 65, Wilkie Road, on Mount Sophia, about 10 minutes from the republic’s shopping haven Orchard Road, Jia represents more than just another development for the former tin-mining company Selangor Dredging under the helm of its managing director Teh Lip Kim.

With an eye to establish the group as a regional property player, this is Teh’s first foray beyond Malaysian shores. She has also set her sights on Australia.

Teh is setting many firsts as she enlarges her property portfolio, both in Malaysia and Singapore. A single thread runs through each of the projects she has thus far launched – niche.

When Teh launched her first development in Kinrara, Puchong in Selangor in 2004, AmanSari was among the first semi-detached and bungalow development in a gated and guarded environment, and by far, the most upmarket, targeted at upgraders.

With Ameera in SS2, launched last year, it was the most high-end condominium in that location. What else can be said of Park Seven in the KLCC area, which started at RM2mil when it was launched three years ago.

In her last chat with the media early August, Teh emphasised that the company was not into township developments, which would take years to materialise and a lot of resources. Rewards from small niche developments come in faster, if not greater. Small developments also tend to need more attention and Teh and her team are pretty hands-on in that respect.

Jia comprises only 22 units in a seven-storey development on 17,000 sq ft with an average price of S$1,637 per sq ft. Prices begin at S$2.1mil for a two-room apartment and goes right up to more than $S5mil for a duplex (exchange rate: S$1 to RM2.4). There are also three-bedroom units. Three of the 22 units come with private gardens of varying sizes. The two-room unit with garden is priced at S$2.8mil.

Says SDB senior sales and marketing manager Leon Kim Yoke: “The garden units work out cheaper on a per sq ft basis.”

She says most city apartments are in the 500-700 sq ft range. There will be a group of buyers who will want larger units of 1,200 sq ft and above.”

The group bought the land in December 2006 for S$20.8mil. A sales value of S$64mil is expected from that project.

All the units will come fitted out with the latest quality built-in cabinets and kitchen appliances. The team went as far as to change the materials that will be used after a trip to a Milan furniture fair.

Leon says there will be an emphasis on details like design and materials to be used as these will be the differentiating factor compared with other mass market projects in that area.

SDB is not the only one building on Mount Sophia. In that vicinity, there are several Singapore developers who have already completed their projects or in the midst of building.

Besides Jia, the company will also be launching No. 2 Gilstead later this year. While Jia is small, niche and cosy; 2 Gilstead is a 33-storey development with 66 units of three-bedroom units located off Bukit Timah Road near Newton Circus, off Scotts Road. While Jia is in the centre of the city, the Gilstead project is in a suburb popularised by several schools.

Leon says most Singaporeans buy into a project because of the proximity of well-known schools. Places are allocated according to how close one lives.

The Gilstead project comprises a single tower block with an indicative price of S$2,200 per sq ft. That piece of land of 37,000 sq ft was bought in May last year for S$96.5mil.

That project is a 50:50 joint venture and its share of revenue will be around S$110mil based on its 50% stake in Chedstone Investment Holdings Pte Ltd. The other 50% is shared on a 30:20 basis between privately held Teh Wan Sang & Sons Sdn Bhd and Teh Wan Sang & Sons Housing Development Sdn Bhd.

Last month, the group purchased a third property – Balstier Complex in Balstier Road – in an established township the likes of Kuala Lumpur’s Jalan Ipoh, for S$47mil.

Currently tenanted, that complex offers potential redeployment when the time is right.

Other Malaysian companies that have gone to the Lion City are IOI and YTL group. While both of these have bought land on Sentosa Cove, all three properties belonging to Selangor Dredging are in the city or established suburbs.

Besides its interest to tap the Singapore market, the group has also invested RM24.6mil in Penang’s famed Batu Feringgi. It bought three pieces of beach-front land located between the Lone Pine and Casuarina hotels where it plans to develop a “good, villa-type resort development” sometime in late 2009 or 2010.

The group is also developing controversial Damansara 2 in Damansara Heights, where it plans to build 21 luxury bungalows on a hillslope, which has drawn a lot of flak from nearby residents.

By The Star

IOI Corp agrees to buy owner of Menara Citibank

PLANTATION group IOI Corp Bhd has agreed to buy Inverfin Sdn Bhd (ISB), the owner of 50-storey Menara Citibank in Kuala Lumpur, for RM586.7 million cash.

Inverfin, which is owned by US lender Citigroup, Singapore's CapitaLand Ltd and Amsteel Corp Bhd, also has a RM160 million debt from the sale of seven-year bonds.

IOI said the proposed acquisition presents a rare opportunity and strategic move for them to acquire a Grade A investment property located at a very prime area within the vicinity of Kuala Lumpur City Centre.

"Menara Citibank is presently enjoying close to 100 per cent occupancy rate with quality tenants consisting of multinational companies and reputable companies in their respective industries," IOI said in a statement to Bursa Malaysia yesterday.

ISB recorded a net profit of RM20.37 million for the financial year ended December 31 2007.

The net book value of the Menara Citibank based on the latest audited accounts is RM458 million and the gross rental revenue is about RM43.3 million. This excludes a RM3.3 million revenue from the car park.

The proposed buy is due to be completed within the fourth quarter of 2008.

By New Straits Times

Malaysia to chair rail project meeting

SINGAPORE: Malaysia will chair a special working group that oversees the implementation of the multi-billion rail project connecting Singapore to Kunming in China.

The group's meeting will be held on November 22 in Putrajaya.

These were among the resolutions adopted during the 10th Asean-Mekong Basin Development Cooperation (AMBDC) meeting held in conjunction with the Asean Economic Ministers and other related meetings here since Monday.

A conference and exhibition on the massive rail project will also be held early next year to promote the project.

The railway will link eight of the AMBDC countries, which includes the 10 members of Asean and China. Some 550km of missing links costing about US$2 billion (RM6.78 billion) still needs to be built.

At present, the "missing links" are at various stages of development.

Apart from this project, there are 44 other projects in various stages of implementation. Of these, 13 projects still need funding worth US$26.5 millon (RM90 million).

In a statement, Asean ministers said the AMBDC process needs to be realigned and synchronised with the Asean Economic Community.

By New Straits Times (by Kamarul Yunus)

Friday, August 29, 2008

Taxation regime for REITs (Real Estate Investment Trust)

WOULD a tax regime in a country be able to promote the real estate investment trust (REIT) industry? Malaysia currently has 13 REITs in the market (compared with 19 in Singapore and seven in Hong Kong).

The following are the overriding salient features of the tax regime in Malaysia for REITs.

Jennifer Chang

Tax transparency

This refers to the REIT not being subject to income tax and in Malaysia, this applies so long as the REIT has distributed at least 90% of its taxable income to investors for the year. This lessens the administrative burden at the REIT level since tax is not paid by the REIT.

Taxing investors directly at the tax rates applicable to them also leads to a more efficient method of taxation.

Withholding Tax (WHT)

Where tax transparency applies, the REIT will have to deduct WHT on distributions made. (See table)

Malaysian corporate investors continue to be taxed at the current corporate tax rate of 26% upon submission of their annual tax returns. Is the tax regime in Malaysia attractive enough for fund managers to locate REITs in Malaysia for regional investments?

Tax incentives

Malaysia has generous tax incentives for unit trusts and REITs. Stamp duty on property purchase by REIT has been exempted and, generally, most investment income earned by the REIT is not subject to tax.

These include interest from fixed deposits and bonds, gains from sale of investments and foreign sourced income which can be distributed as tax-exempt distribution to investors.

The WHT levied on the taxable rental income represents the bulk of a REIT’s revenue. Are WHT rates in Malaysia competitive?

If the investor is a pensioner or a tax-exempt body, the WHT of 15% is not equitable since they are mostly not subject to income tax.

High net worth individuals are better off since the WHT at 15% would generally be lower than what they usually have to pay.

Generally, most companies in Malaysia should not be worse off since rental income would be taxed at the normal corporate tax rate anyway.

Naturally, one can infer that this REIT tax framework was specifically crafted to attract specific investors or could merely be in tune with the existing investor profile for REITs in Malaysia.

The main question for foreign institutional investors is who would be eligible for the reduced WHT rate of 20% and whether specific application has to be made for each foreign institutional investor.

Although the term foreign institutional investors has been described to incorporate pension funds and collective investments funds, the breadth of investors to be included in this term has not been specifically identified.

Although the tax transparency system is meant to be a more efficient system for REITs, having various rates for various categories of investors means the administrative burden appears to have shifted to the fund manager, who has to have a very good tracking system to determine which portion of distribution has to be subject to WHT and which rate to apply.

With thousands of investors who buy and sell at any point in time, information on each investor may not be so easily tracked.

In comparison, Singapore’s WHT rates for REIT investors are simplified, i.e. individual investors are not subject to WHT while all corporate investors are subject to a reduced WHT of 10%. This simplifies the process for fund managers and the lower WHT helps promote REITs in Singapore.

It is important to note that individuals and foreign investors in Malaysian bonds do not incur any WHT on the interest or profits received. Therefore, providing the reduction in WHT would certainly put REITs in a better position. In this competitive environment, more can be done to enhance the industry and the streamlining and reduction in WHT would provide a boost to this industry.

The writer is senior executive director at PricewaterhouseCoopers Taxation Services Sdn Bhd

By The Star

Glomac reviewing property launches

KUALA LUMPUR: Glomac Bhd is reviewing its property launches given the current challenging environment of inflationary pressures and the slowdown in demand for medium-range residential properties.

Managing director Datuk F.D. Iskandar said the company was relooking at some of its medium-range residential properties.

Glomac Berhad group executive chairman Tan Sri F.D Mansor and group managing director Datuk FD Iskandar at the press conference on Thursday.

“We find the margins have been squeezed,” he said after the company AGM yesterday.

However, he said, the company would still continue with the launch of its high-end niche projects as the takeup rate of such projects had not been as badly affected by the current situation in the market.

“With such volatility in construction material prices, it has not been an easy operating environment for us.

“Nevertheless, we are pleased to have achieved a favourable set of results for the year and, more importantly, our recent launches have been well received,” he said.

While the group enjoyed brisk sales of its township developments, Bandar Saujana Utama and Saujana Rawang, its commercial project in Sri Hartamas, Glomac Galleria, and the initial phases of its gated development in Bandar Sri Bangi were fully sold out within months of being launched, he said.

For the financial year ended April 30 (FY08), including the en bloc sale of Glomac Tower, the group achieved record sales of RM916mil, and unbilled sales stood at a high of RM667mil.

Iskandar said the RM650mil mixed development, Glomac Damansara, would likely be launched in the next quarter.

“The first phase will comprise shop/offices and an office block.

“We are also very excited about the new land bank we secured. We believe this latest phase of Plaza Kelana Jaya, where Restaurant Kelana Seafood Centre was formerly sited, offers strong potential for another commercial development. We expect to launch this project in 2009,” he said.

At present, the company has about 1,000 acres of land bank, with a gross development value of about RM3.5bil.

The company yesterday announced its latest unaudited revenue of RM71.6mil and pre-tax profit of RM4.9mil for the last quarter ended April 30.

For FY08, the group registered 10.4% growth in revenue to RM323.9mil, driven by contributions from Suria Stoner and Plaza Glomac.

It reported pre-tax profit of RM50.2mil and net profit of RM35.1mil, an increase of 9% from FY07.

On plans for further joint ventures, Iskandar said the group had been invited by the Al Batha Group of the United Arab Emirates to diversify into the Middle East.

By The Star

Glomac sees KL projects boosting 2009 earnings

GLOMAC Bhd expects to improve its net profit in fiscal 2009, thanks to sales of its Glomac Tower and Suria Stonor projects in Kuala Lumpur.

The property developer made net profit of RM35.1 million in the year ended April 30 2008, on revenue of RM324 million.

However, sales of properties costing below RM300,000 are affected by higher prices although demand for high-end properties is still firm, group managing director Datuk F.D. Iskandar said.

ISKANDAR: More launches over the next one year

"With more launches over the next one year, there should be more sales. But we will look back at figures in terms of profitability," he said after the company's shareholder meeting in Kuala Lumpur yesterday.

Glomac has raised by 20 per cent the prices for properties costing below RM300,000 at its townships in Sungai Buloh, Rawang and Johor.

"Margins are squeezed by higher construction cost, which has gone up by 30 per cent. By raising the selling price, it has affected sales," Iskandar said.

Glomac has 400ha in Sg Buloh, Rawang and Johor, with earnings potential of RM3.5 billion.

While the three townships may not do well this year, Iskandar said he was confident of sales for its seven other projects.

Glomac has pockets of land in Selangor. It aims to launch Glomac Damansara, an integrated project, a commercial complex at the site of the former Kelana Seafood Centre in Petaling Jaya, and two office towers and a serviced apartment block in Mutiara Damansara for RM1.1 billion.

Group executive vice-chairman Datuk Richard Fong was optimistic that margins from high-end properties would cushion rising costs.

Glomac has plans to venture to the Middle East.

Fong said it may do this through its partnership with Al Batha Real Estate Co of the United Arab Emirates or with other developers in the region.

By New Straits Times (by Sharen Kaur)

Sunrise pays RM179m for land near Petronas Twin Towers

SUNRISE Bhd may carry out a mixed development project on a piece of prime land opposite the Petronas Twin Towers where Wisma Angkasa Raya now sits.

This could include hotels, offices and service apartments, executive chairman Tong Kooi Ong said in a briefing in Kuala Lumpur yesterday.

Plans will be finalised by the third quarter of 2009.

"We'll get the best architects to come up with an iconic structure," he said.

The property developer, under a deal with Reliance Pillar Sdn Bhd and Lembaran Segimaju Sdn Bhd, will pay RM179 million for the 69,171sq ft land on which the building is situated, or an equivalent of RM2,588 psf.

That price is a record for land bought for redevelopment in the Kuala Lumpur City Centre area.

Wisma Angkasa Raya, which is around 29 years old, is Kuala Lumpur's first high-rise office building. The unencumbered property is a 24-storey commercial building comprising a 20-storey office tower and a four-storey podium with two basement carparks.

It has a total net lettable area of 167,728 sq ft and an occupancy rate of 96.4 per cent.

Sunrise reported a net profit of RM45 million for the fourth quarter to June 30 2008, a 28 per cent jump from the same quarter a year ago.

Revenue improved 48 per cent to RM258 million.

Sunrise has a dividend policy of 35 per cent of the group's profits but for the financial year ended June 2008, there is no cash dividends.

"We've already informed shareholders that Sunrise bought shares from the open market and gave out treasury shares in lieu of cash," Tong said.

By New Straits Times (by Ooi Tee Ching)

BLand signs pact to develop golf resort in Libya

KUALA LUMPUR: Berjaya Land Bhd (BLand) has entered into a memorandum of agreement with Libya’s Economic and Social Development Fund (ESDF) and the OYIA company to develop an integrated golf resort cum residential and commercial development in Libya.

The proposed project would be developed in phases with the Libyan government agreeing to bear the infrastructure costs, BLand said in a filing with Bursa Malaysia yesterday.

BLand would prepare the master plan for the project and with the assistance of the ESDF and OYIA, submit it to the relevant Libyan authorities for approval.

“The total estimated development costs for the project is to be determined upon completion of the feasibility study of the master plan.

“It is expected to be funded from internally generated funds and/or borrowings of the BLand group, the actually composition of which will be determined at a later stage,” BLand said.

By Bernama

MRCB sees better results in fourth quarter

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) expects a better fourth quarter on the back of moderating construction and building material prices, says group managing director Shahril Ridza Ridzuan.

Shahril Rodzha Ridzuan

The group posted a net loss of RM5.2mil for the second quarter ended June 30 amidst soaring construction costs, which resulted in substantially reduced margins despite a substantial increase in revenue to RM228.5mil from RM96.6mil in the previous corresponding period.

Due to accounting standards, Shahril said the company had to take into the books any possible increase in cost in its second quarter results even though the group was seeking variation-of-price compensation for some of its ongoing projects.

“The third quarter will still reflect the impact of the increase in electricity tariffs and fuel prices, which rose fairly high during the quarter,” he said after the unveiling of MRCB’s first Global Reporting Initiative (GRI)-based sustainability report on Wednesday.

MRCB has deferred some of its property launches until such time when material prices stabilise and the company is able to properly account for project costs.

“The price points of our projects will move up in tandem with rising building costs. New launches will have price adjustments to reflect those changes,” Shahril said.

On developments in the Middle East, he said the company had started work on a project in Saudi Arabia. “It’s something very similar to what we are doing at KL Sentral and Penang Sentral,” he said, adding that the project was still in the early design phase.

On its sustainability report, Shahril said: “We look at this report as an important first step to make sustainability a core value at MRCB. We are committed to transparency and making this information available to the public as we work towards our goals.”

The sustainability report includes key indicators on the group’s environmental and social governance performance.

It also highlights the importance of sustainable development as part of the group’s broader agenda, based on the G3 guidelines which have been harmonised with the United Nations Global Compact and other tools.

By The Star

Thursday, August 28, 2008

South Korea keen on tourism ventures with Malaysia

SOUTH Korea, which is developing its tourism and leisure industry as a future growth engine, is keen to draw from the experience and strength of Malaysian companies.

"The Chinese tourism industry provides huge potential for Korea and since Malaysia has a very advanced tourism industry, it holds a promising area for both countries to do more in the future," said South Korean Ambassador to Malaysia Yang Bong Ryull at a seminar on forging partnership between South Korea and Malaysia in Kuala Lumpur yesterday.

YANG: The Korea-Asean free trade agreement will be a catalyst to strengthen partnership

The seminar was to provide Malaysians an insight to investment opportunities in South Korea's Jeju Island's real estate, tourism, education and medical industries.

Bilateral trade between both countries expanded over 10 per cent, registering around RM50 billion last year and Yang estimates that it can reach RM100 billion in five years.

"The Korea-Asean free trade agreement signed last year will be a catalyst to strengthen our partnership to greater heights," he said.

"Joint ventures and strategic alliances between both are countries have been expanding and diversifying from manufacturing to more value-added and technologically advanced sectors such as information and communication technology, oil and gas, finance, property development, tourism and education," he added.

Korea Telecom Freetel, one of the largest mobile service providers in South Korea, is in a joint venture of 3G mobile service with U-Mobile Sdn Bhd in Malaysia.

Daewoo Securities Co has also entered into a strategic alliance with CIMB Investment Bank Bhd, providing cooperation in investment banking and asset management and developing a sukuk market in South Korea.

Woori Bank and Woori Investment, one of the largest financial groups in Korea, recently opened their first representative office in Malaysia.

Governor of Jeju special self-governing province Kim Tae Hwan also urged Malaysian companies to look into the development of tourism complexes, hot spring centres, animal theme parks and resorts.

So far, Berjaya Land, a Berjaya group subsidiary, has invested US$2.6 billion (RM8.76 billion) in developing a resort-style residential complex on Jeju Island.

Malaysian Industrial Development Authority deputy director general 1 Datuk Afifuddin Abdul Kadir said last year, South Korean firms invested in 32 projects worth US$325.2 milllion (RM1 billion) in Malaysia, in which US$31 million (RM104 million) were in new projects and US$294.2 million (RM99 million) were in expansion and diversification projects.

By New Straits Times (by Rupa Damodaran)

UEM Land to woo Indonesian buyers

JOHOR BARU: UEM Land Bhd will be promoting its four ongoing mixed development projects in Iskandar Malaysia to attract Indonesian property buyers to Johor.

The projects are Nusa Idaman, East Ledang, Ledang Heights and Horizon Hills (a joint development between Gamuda Land and UEM Land).

Nusajaya Development Sdn Bhd sales manager Razali Bakhtiar (left) with marketing manager Yazidah Jemali and senior manager Daniel Lee Lock Soon showing the Nusa Idaman model.

Strategic marketing general manager Zamry Ibrahim said the company wanted to attract more wealthy Indonesians to buy properties in Iskandar.

He said for years, many affluent Indonesians preferred to buy private properties in Singapore due to the aggressive marketing strategy by the Singapore-based developers.

“It is high time for Malaysian property developers to look to Indonesia and attract wealthy Indonesianshere,” Zamry told StarBizrecently.

Nusa Idaman is developed by Nusajaya Development Sdn Bhd, a wholly-owned subsidiary of UEM Land, the master developer of Nusajaya, the key driver of Iskandar.

UEM Land will be taking part in a property exhibition – An Investment Opportunity@Iskandar Malaysia – tomorrow at The Shangri-La Hotel Jakarta.

The event is jointly organised by Iskandar Regional Develop-ment Authority, Nusajaya, Iskandar Investment Bhd and Danga Bay Sdn Bhd.

Zamry said the company had so far taken part in property shows in China, Singapore and South Korea and would be going to Dubai and Australia in October.

He said with the skyrocketing prices of private properties in Singapore, Johor Baru would be an attractive place for Indonesians to invest in properties.

“We want to promote Iskandar and Nusajaya City in particular to wealthy Indonesians under the Malaysia My Second Home Programme,” said Zamry.

By The Star (By Zazali Musa)

Wednesday, August 27, 2008

Property developers to get 2009 goodies

PROPERTY developers can expect to get some goodies from Budget 2009 to help them cushion the impact of rising fuel prices and raw material costs, says the Housing and Local Government Ministry.

Minister Datuk Seri Ong Ka Chuan said while the budget will be people-centric, the ministry has proposed to the government that incentives and assistance be pro-vided to developers to minimise the blow of a possible slowdown.

“We hope the government will render some assistance, especially on tax structures, as construction cost has escalated by some 30 per cent,” he said after opening the 19th National Real Estate Convention 2008 (NREC) in Petaling Jaya yesterday.

On the 30 per cent low-cost housing quota imposed on private developers, which has impacting all players financially, Ong said it is the prerogative of the state authorities to adjust the requirement.

“There must be flexibility. It should be lower in areas with the least Bumiputera concentration and can be more if otherwise. If really there is no demand, there is no point implementing it,” he said.

The Bumiputera Property Exhibition Selangor 2008 held last month to sell unsold Bumiputera lots saw a display of RM7 billion worth of properties offered by 50 developers or 200 times more than in 2007.

FIABCI Malaysia head Datuk Richard Fong told Business Times that the low-cost housing quota needs to be addressed as developers are losing money.

The ceiling price for low-cost houses currently is RM25,000, RM35,000 and RM42,000 per unit, set 10 years ago to assist the lower income group.

“Developers lose RM15,000 for every low-cost unit they build. With the rise in raw materials by 30 per cent, which the ministry has recognised, they are bound to lose much more,” Fong said.

“The other concern is, due to the drastic increase in raw material prices, smaller developers will be in the doldrums, hence there is a strong likelihood of a dramatic rise in abandoned projects,” he said.

NREC organising chairman Pre-vindran Singhe, who is also group chief executive officer and founder of Zerin Properties, said the biggest overhang currently is for houses priced below RM250,000.

“The market for medium- to high-end houses is superb. We are experiencing a growth in this sector,” he said.

Zerin’s wish list for Budget 2009 is to see the 10 per cent withholding tax removed for Real Estate Investment Trusts and a reduction in stamp duty.

By New Straits Times - Business Times - (by Sharen Kaur)

Glomac scouts for more land in KLCC area

GLOMAC Bhd may buy more land within the Kuala Lumpur City Centre (KLCC) area to develop high-end properties, executive vice-chairman Datuk Richard Fong said.

“We are scouting for strategic land areas but the price must be right,” Fong told Business Times in an interview in Kuala Lumpur recently.

He was speaking at the handover ceremony of Suria Stonor, Glomac’s RM380 million condominium project in Persiaran Stonor, Kuala Lumpur.

Suria Stonor is Glomac’s flagship development in Kuala Lumpur and the most expensive project in its 20-year history.

The units are 95 per cent sold and the project has met its profit forecast, Fong said without revealing details.

Half of the units were bought by Singapore’s ING Real Estate Fund in 2005.

Launched in September 2005, it has two blocks of 23-storey and 24-storey respectively, featuring luxury “bungalows-in-the-sky” with eight triplex penthouses, 28 duplex condominiums and 78 single-floor units.

The project is on a 0.84ha freehold plot that was bought in 2004 for RM430 per sq ft (psf). The land price in the area is reaching RM2,000 psf, he said.

Fong expects profit from Suria Stonor to flow in this financial year ending April 30 2009.

Suria Stonor offers four units per floor with sizes of between 3,000 sq ft and 9,000 sq ft, each serviced by a private lift. The market prices for each unit now range from RM4 million to RM11.7 million, which is double its launch price.

By New Straits Times (by Sharen Kaur)

Property sector still a draw

KUALA LUMPUR : The Malaysian real estate still offers an attractive investment opportunity for foreign players despite uncertainties in the global financial markets.

According to Housing and Local Government Minister Datuk Seri Ong Ka Chuan, apart from the Middle East, the property sector was also attracting foreign investors from the Indian subcontinent and Asian countries such as South Korea, China and Japan.

“Malaysia is becoming more attractive to foreign investors,” he told reporters after officiating the 19th National Real Estate Convention (NREC) yesterday.

However, he did not discount the fact that the global rise in fuel prices had a domino effect on the local real estate industry, which could trigger a slowdown in the overall economy.

Existing projects should go on and new projects initiated to counter the rippling effect on the economy, he said.

While the rising construction and fluctuating fuel costs were an immediate challenge for the industry, Ong was optimistic that the budget would be “people-centric,” with more goodies to help alleviate the burden of these spiralling costs.

“We hope that the Government will give some incentives to the housing and building materials industry,” he said.

Ong also called for a review of the diesel prices

“An area that has been overlooked is the diesel-powered machinery being used in building sites,” he said, suggesting the Government review the road tax of diesel vehicles to be at par with petrol vehicles.

On the Real Estate and Housing Developers Association’s proposed change in housing policies with regard to the 30% bumiputra quota, Ong said there should be some flexibility. “Maybe in areas with not so many bumiputras residing, the quota could be adjusted.”

By The Star

IJM Corp still doing well despite challenging times

SUBANG JAYA: IJM Corp Bhd is still doing well despite the challenging times in the construction industry, said chief executive officer and managing director Datuk Krishnan Tan.

Datuk Krishnan Tan (right) and IJM Corp deputy CEO & deputy managing director Teh Kean Ming at the AGM.

Continuous focus would be placed on securing overseas jobs to contribute further to the company’s order book, he told reporters after its AGM and EGM yesterday,

The company announced yesterday a net profit of RM129.1mil for its first quarter to June 30, against a loss of RM728.9mil in the same period a year earlier.

Revenue improved to RM1.22bil from RM1.11bil previously, while earnings per share stood at 10.65 sen compared with a loss per share of 89.34 sen.

On the West Coast Expressway project undertaken in a joint venture with Kumpulan Europlus Bhd, Tan said he expected some delays as there was a double-digit increase in the cost of building materials.

IJM has a 25% stake in Europlus.

Tan said that in the Middle East, the company was bidding for two jobs in Bahrain, one in Dubai and two in Abu Dhabi worth more than RM1bil.

Its current order book is estimated at about RM5bil, of which 50% were contracts from India and the Middle East.

On the proposed listing of IJM (India) Infrastructure Ltd (IJMII) on the National Stock Exchange of India. Tan said the company had deferred it but ultimately IJMII would be listed.

“The environment in India, which contributes 30% of our order book, has changed substantially over the last six months to a year due to rising costs.

“Interest rate has also gone up to as high as 13% in India, thus affecting both the cost of doing business and demand from prospective property buyers,” Tan said.

IJM’s expressway project, which starts from Chilkaluripet to Vijayawada in Andhra Pradesh, India, requires a capital expenditure of RM900mil.

Total construction cost is RM550mil and the concession spans 15 years.

“Originally the two-lane road was to be expanded to four lanes.

“Now the Indian authorities want six lanes,” said Tan.

By The Star

Sunway to develop Toa Payoh land

SUNWAY Holdings Bhd plans to jointly develop a 2.75ha land in Toa Payoh, Singapore, into a mixed project with estimated gross development value of S$680 million (RM1.64 billion).

Teaming up with Hoi Hup Realty Pte Ltd Group, Sunway expects the project to be launched by June 2009 and should take four years to complete.

By New Straits Times

Tuesday, August 26, 2008

IJM Land plans to launch 28 projects

SUBANG JAYA: IJM Land Bhd plans to launch 28 mixed development projects with a combined gross development value (GDV) of RM600mil, says managing director Datuk Soam Heng Choon.

Datuk Soam Hong Choon

“The projects will be located in Penang, Klang Valley, Malacca, Johor, Negri Sembilan and Sandakan,” he said after the company AGM and EGM yesterday.

He said the company was currently developing “The Light” waterfront project in Penang and a township called Bandar Utama in Sandakan.

According to Soam, the company had taken over Sebana Cove, an on-going resort-cum-mixed development project on the southern east tip of Johor.

This would be redeveloped to attract Singaporeans, he said.

The company paid RM120mil for Sebana Cove with infrastructure completed. Current prices in the area range from RM600,000 for a semi-detached house to RM400,000 for a town house.

“We are targeting the middle to upper-middle segment,”Soam said.

On another note, IJM Land would be a geographically diversified Malaysian developer once it completed its rationalisation exercise by Sept 5, Soam said.

IJM Land, previously known as RB Land Holding Bhd, used to have projects only in the Klang Valley and Seremban.

“We would continue to showcase our property in the Klang Valley, Seremban, Penang, Johor, Malacca and Sandakan.”

On IJM Land’s overseas venture, Soam said the company was investing in Changchun, the automotive city of China, for a commercial service suites-cum-residential development with a retail component.

It holds a 50% stake in the project, which will have a GDV of RM500mil when completed in four years.

On measures taken to counter the rising building material cost, Soam said its in-house construction arm was one way of keeping cost down.

By The Star

AMDB plans to buy 4 property firms from parent

AMDB Bhd plans to buy four property companies from parent AmcorpGroup Bhd as part of a reorganisation strategy.

Under the deal, AMDB will own a 100 per cent stake in Amcorp Prima Realty Sdn Bhd (APRB), a 60 per cent stake in HDC-Amcorp JV Sdn Bhd, a 100 per cent interest in Regal Genius Sdn Bhd and a 100 per cent stake in Distrepark Sdn Bhd.

AMDB will pay RM159.72 million in cash and new shares for its interest in APRB, Regal Genius and Distrepark to settle inter-company loans owed by the three companies to AmcorpGroup.

AMDB will also pay RM20.99 million for a 60 per cent stake in HDC-Amcorp.
APRB owns the Kayangan Heights development in Selangor, while HDC-Amcorp is in a joint venture to develop the Sibu Jaya township in Sarawak.

In a statement released in Kuala Lumpur yesterday, AMDB said it plans to reorganise itself as a focused property, engineering and infrastructure player.

The reorganisation also entails AMDB writing off RM356.55 million in accumulated losses, as well as the sale of certain non-core assets.

The group plans to hive off businesses which are not meaningfully valued by the market, such as its restaurant operations (Restoran Seri Melayu), travel and tour agents Harpers Travel and a minority stake in an advertising agency, J.Walter Thompson, to its holding company AmcorpGroup.
AmcorpGroup will pay RM22.1 million for them.

As a first step, AMDB will write off its entire accumulated losses via a capital reduction exercise, followed by a capital consolidation exercise. Secondly, it will sell the non-core assets and buy the four property companies.

Finally, AmcorpGroup proposes to make an offer for sale of up to 118 million shares to other shareholders of AMDB at an offer price of 50 sen per share.

Meanwhile, AMDB registered a net loss of RM1.4 million in its first-quarter financial period to June 30 2008, which was due to RM3.1 million in losses from discontinued operations.

By New Straits Times

Factor in changing lifestyles, builders told

KUALA LUMPUR: Developers should plan and design their projects to take cognizance of the changing lifestyles of Malaysians.

Bukit Kiara Properties Sdn Bhd chairman Datuk Alan Tong said in view of strong inflationary pressure, developers should strategise to come up with projects that allowed Malaysians to be less dependent on fuel, and live and work in an efficient manner.

Datuk Alan Tong

“Ideally, where we live and work should not be too far from each other,” he told StarBiz.

Based on what he observed in developed countries, Tong said real estate development strategies for Malaysia should focus on meeting the changing lifestyles of her people.

Citing the United States as an example, he said that while that country was well developed, the residential communities were very spread out.

In the outskirts of the cities and semi-urban areas, commuting could prove difficult without one’s own means of transport, he said.

“Their lifestyle revolves around motor vehicles,” he said.

In Malaysia, with the current high fuel prices, people should cut down on their expenses and one way to do so was to live and work in the same locality, he said.

High density projects located close to the city could be the way forward, he said.

On the current sentiment in the property market, he said: “While the industry is not so dependent on oil, the increase in oil prices has also impacted raw material prices.

“We know of contractors who have signed contracts are in a bind as they are caught by the sudden increase in prices.”

As for developers, he said those who had not launched many projects, were holding back. “Many developers are diversifying overseas instead,” he said.

On property market prices, Tong said: “Compared with other countries in the region, we are still very cheap. Property, especially in the upmarket segment, would still be appealing to some foreigners,” he said.

On abandoned projects, he said this problem was not as rampant as it used to be when cooperative societies built houses.

Tong is among the key speakers at the 19th National Real Estate Convention held today and tomorrow at One World Hotel, Bandar Utama.

FIABCI Malaysia, together with The Institution of Surveyors, Malaysia and the Association of Valuers & Property Consultants in Private Practice Malaysia, is organising the convention, which would see industry leaders gather to share their winning strategies in four sessions.

Among the topics to be discussed are real estate strategies moving forward, development strategies, design and construction strategies and investment strategies.

Notable speakers include Singapore’s DLF Trust Management Pte Ltd chief executive officer Wong Ah Long, Indonesia’s PT Ciputra Development president commissioner Ciputra, and the Philippines’ Architect Felino Palafox, founder Jun Palafox Jr.

A total 400 participants are expected at the convention.

By The Star (by Eileen Hee)

IOI Corp buys Menara Citibank

PETALING JAYA: IOI Corp Bhd has succeeded in its bid to buy Menara Citibank for an undisclosed sum, the company said.

It told Bursa Malaysia yesterday that it was acquiring the building from Inverfin Sdn Bhd. However, it declined to state the price for the building. A local media report had said the price tag was RM800mil.

“The company shall make the requisite announcement on the detailed terms of the purchase in accordance with the listing requirements as soon as the definitive agreement has been executed,” it said.

Trading in IOI Corp shares was voluntarily suspended at 4.22pm yesterday and will resume at 9am today.

The share price fell 15 sen to RM5 before the suspension.

By The Star

Monday, August 25, 2008

Mega cities of opportunity

US$200 billion project in Yemen and Djibouti holds lucrative prospects for Malaysian contractors.

INTERNATIONAL ATTRACTION: An artist’s impression of the Al Noor Cities project.

The massive US$200 billion (RM668 billion) Al Noor Cities project, comprising a city each in Yemen and Djibouti, is taking shape and presents various investment opportunities for experienced contractors from Malaysia.

Al Noor Holdings Investment chief executive officer Mohammed Ahmed Al Ahmed said over the next six years, the project proposes an investment of US$31 billion (RM103.54 billion) in Yemen and US$20 billion (RM66.80 billion) in Djibouti, some by Al Noor, some by private investors.

In 15 years' time, according to plan, US$200 billion would have been invested in the project - US$105 billion (RM350.70 billion) in Yemen, US$70 billion (RM233.80 billion) in Djibouti and US$25 billion (RM83.5 billion) on the world's longest suspension bridge linking the two, he added.

Mohammed Ahmed and project executives and advisers expect "great appetite" for the build-own-operate contracts that will make up the bulk of developments within the Al Noor masterplan.

The project, the vision of Saudi-Yemeni construction magnate Sheikh Tarek Mohammed bin Laden, has attracted interest from a host of international companies. US giants Honeywell, Avaya and AIG Investments are already among its partners.

"It is a new city and it is happening," Mohammed Ahmed said at the launch of Al Noor Djibouti at Djibouti Kempinski Palace recently.

Malaysian contractors like Eversendai Corp, MMC, Gamuda and WCT Engineering that have vast experience in West Asia could stand as possible front-runners to bid for lucrative contracts in the project.

Mega projects undertaken by Malaysian companies in West Asian countries include the New Doha International Airport in Qatar worth US$543 million (RM1.81 billion), mixed development in the Al-Reem Island Project (Zone C) in Abu Dhabi (US$378 million; RM1.26 billion), Abu Dhabi City Centre (US$429 million; RM1.43 billion), Jizan Economic City in Saudi Arabia (US$2.9 billion; RM9.69 billion) and the Shohiba Independent Water & Power Project (US$2.6 billion; RM8.68 billion).

"Africa is the centre of the world with a population of almost one billion, while the Middle East North African region has a population of 400 million. We have all the ingredients to make this project a reality," Mohammed Ahmed said.

Al Noor Cities' master plan calls for one 1,500 sq km city in the southwestern tip of Yemen and a similar 1,000 sq km city in Djibouti. The cities will be linked by a 28.5km road and rail bridges.

The bridge will open up trade routes between Yemen, the Gulf countries and Africa. It will have a six-lane highway and four light rail lines, water and oil pipelines.

Al Noor Cities will also feature free trade zones, research and development facilities, technology parks and financial districts.

Agreements are in place with governments of both countries to start financing discussions with institutional and private investors, corporates and governments.

"The idea is to finance the project in progressive phases and implement it step by step," said Ross Connelly, managing director of Akkadian Private Ventures, a Washington-based project financing firm hired as an adviser.

There will be clear delegation of authority between the governments and administrations of the two cities, said Reem Alaloui, vice president of US-based AECOM International Development which is drawing up the free zone frameworks.

Dean Kershaw of management services firm L3, the project manager, said talks on the framework agreements will begin "within weeks" and should be completed before the end of the year.

By New Straits Times (by Zuraimi Abdullah)

Mayland builds its strength on choice locations

MALAYSIA Land Properties Bhd (Mayland) is confident it can hold its own against the increasing number of developers venturing into the high-end market.

"There are many players in this segment now, but we are unique because of the landbank that we have in choice locations," Mayland executive director Yeo Chung Sing told Business Times.

In recent years, Mayland has launched a number of high-end condominium developments along Jalan Kuching in Kuala Lumpur, a stone's throw from the city centre.

The Regalia, launched last year, is located behind The Mall.

Its latest development, Royal Regent, is off Jalan Kuching as well and near its Putramas development.

"I believe our pricing, from RM330 per sq ft, makes the Royal Regent very competitive considering that we are just 10 minutes away from property which is selling at RM2,000 per sq ft," Yeo said.

The ideal location has enabled the group to sell 30 per cent of the 471 units on offer even before the development was launched last Thursday.

Royal Regent's gross development value is RM300 million.

"Our buyers have always looked to us to give them developments that not only cater for their needs but are also sound investment decisions," Yeo said.

The Royal Regent's five-storey clubhouse and three condominium blocks hold the promise of being a one-of-a-kind development.

"We have spent some RM10 million on the landscaping and clubhouse alone to ensure that buyers get a premium-value product."

There will also be 16 duplex penthouses in the development.

Yeo said the group is moving ahead with its more than RM1.2 billion worth of launches this year despite the increasing prices of building materials and the somewhat dampened economic outlook.

Mayland has revised the pricing for several of its projects to take into account the almost 30 per cent increase in cost of construction materials, he added.

By New Straits Times (by Presenna Nambiar)

Faber may replicate Taman Desa success story

FABER Group Bhd may replicate its multi-billion-ringgit Taman Desa development if it finds a good location.

"We are not discounting it. It will be a challenge, but we are ready," managing director Adnan Mohammad told Business Times.

ADNAN: Will look at possibilities

"We will look at vicinity and locality since people like the Kuala Lumpur address.

"There's still a lot of land available in Segambut and the surrounding areas. I'm not saying that's where we will go, but we will look at all possibilities," he said.

Faber started developing the 100ha Taman Desa at Jalan Klang Lama in the mid-1970s.

About 90 per cent of Taman Desa, which will take another four years to complete, comprises residential properties. The rest are commercial units.

Faber still has 1.32ha in Taman Danau Desa, part of Taman Desa, ready to be developed. It aims to launch 38 three-storey link-villas, priced from RM1.6 million each, late next year.

Faber, in a venture with Kuala Lumpur City Hall, will also develop 2.28ha in Taman Danau Desa. It will build 40 semi-detached homes, priced from RM1.9 million each, and six bungalows, priced from RM2.5 million a unit, this year.

On another development, Adnan said that Faber will not proceed with a plan in the Sabah Growth Corridor as it wants to focus on two new housing projects in Kota Kinabalu.

This month, Faber plans to launch 32 three-storey semi-detached houses and two bungalows in Taman Hilltop Perdana.

Also in the pipeline is Lucky Heights, a RM110 million condominium project comprising more than 300 units.

Property development makes up about 35 per cent of Faber's revenue, with the rest contributed by its hospital support services business.

By New Straits Times (by Sharen Kaur)

MAHB seeks developers, investors for land around KLIA

MALAYSIA Airports Holdings Bhd (MAHB) will issue a request for proposal (RFP) next month to developers and investors interested in developing land around the KL International Airport (KLIA) in Sepang.

The airport operator has a 30-year lease of 9,690ha at KLIA starting from 1998. Of this total, 6,400ha are for non-aeronautical activities and the rest for aeronautical activities and facilities such as ramp, apron and runway.

MAHB general manager of land development, Muhd Najib Mohd Rawi, said the company is opening 1,092ha of the total non-aeronautical land, currently planted with oil palm, for development over the next 10 to 15 years.

"Our aim is to increase our non-aviation revenues and passenger numbers at KLIA
through creation of activities. In the long term, we want to make KLIA an airport city," he told Business Times in an interview.

MAHB last year commissioned a land suitability study, the results of which showed that the area is suitable for high value and time-sensitive manufacturing facilities, logistics centre and facilities, meetings, incentives, conventions and exhibitions (MICE), destination retail or shopping, tourism and recreational activities.

"A master plan has been developed, outlining development options, and submitted to the Sepang Municipal Council. We expect it to be approved in two months," said Muhd Najib.

"In the meantime, we will continue to generate awareness of the project among developers and investors both locally and abroad," he added.

MAHB is looking to form a joint-venture partnership to develop, build and operate the land or lease the land to others rather than developing it alone.

"We will self-develop some of the development components for long-term recurring rental income," said Muhd Najib.

"We won't invite just anybody. The developers and investors must offer premium development properties in order to maintain the KLIA brand of modern and high technology facilities. This must be carried out throughout the whole development," he added.

Under the master plan dubbed "KLIA Aeropolis", the majority 395.37ha or 36.2 per cent of the 1,092ha land are zoned for commercial use, and 230.4ha or 21.1 per cent for parks and green.

The master plan also features a 128ha allocation for two 18-hole golf courses, 121.07ha for agro-tourism development, and 10.06ha for a stadium.

Muhd Najib said because of the vast development, the RFPs will initially cover several components of the commercial zone such as the expo and convention centre, specialised retail outlets and purpose-built offices.

"We will also invite developers and investors to submit a RFP to develop and operate a 40ha theme park, a logistics centre and golf courses at the airport land," he added.

The company is planning to have a theme park that will rival those in Genting Highlands and Singapore's Sentosa Island.

"The advantages our location has are its proximity to the airport, the abundance of land and the presence of a low-cost terminal," said Muhd Najib.

To attract developers and investors, MAHB is in the midst of drawing up plans to develop a transport centre similar to the KL Sentral station, to connect people from the commercial zone to the airport terminal.

"For this area to be successful, it must be well connected. As such, we are proposing a tram or train line to connect the commercial centre to the airport.

"We are studying what is best. We have allocated some parcels of land for this transport centre," said Muhd Najib.

On the cost of development, Muhd Najib said it will mainly be on infrastructure.

"We will develop the land in phases. For instance, to get the ball rolling, we have allocated a budget in the coming year to commence initial infrastructure development in the commercial zone, covering 20ha," he said, but declined to reveal any figures.

By New Straits Times (by Kang Siew Li)

Saturday, August 23, 2008

Setia Haruman to stretching its boundaries

Setia Haruman is considering a listing, either locally or overseas, in three to five years and venturing beyond Cyberjaya.

GROWING CONCERN:Lao says Setia Haruman intends to keep the business flourishing even after Cyberjaya is developed.

SETIA Haruman Sdn Bhd, master developer of the country's first information and communications technology (ICT) hub Cyberjaya, may plan an initial public offering (IPO) in three to five years to raise funds.

It may consider a local IPO or list on a foreign exchange, Setia Haruman chief operating officer Lao Chok Keang said.

He said Setia Haruman was considering venturing beyond Cyberjaya to stretch its boundaries.

"We are currently a single-project entity with only Cyberjaya in our hands. We want to run it as a growing concern so that the business can flourish even after Cyberjaya is developed," Lao said.

Setia Haruman, 75 per cent held by Emkay Group and 25 per cent by UEM Group, has the rights to sell land parcels as well as plan, design and develop the infrastructure at Cyberjaya from 1997 until the project is developed by 2019.

In an interview with Business Times in Cyberjaya, Lao said that Setia Haruman may buy land on the outskirts of Cyberjaya and in other high-impact areas in the country to build up the company.

It may also venture to Vietnam, Cambodia and eastern European countries looking at similar developments like Cyberjaya.

"Cyberjaya is a planned city and there're only a few in the world. We have to create a character to sell the idea," Lao said.

He declined to elaborate on plans or say if the company was in talks with any parties.

"Our people are well equipped to handle projects overseas. We have expertise in housing, infrastructure development and building construction that requires specific ICT needs."

In the financial years 2006 and 2007, Setia Haruman achieved more than RM500 million sales, with 10 per cent profit margin.

Lao said there will be an improvement this year as the company has been selling more land in Cyberjaya to developers eyeing high-impact projects.

Setia Haruman has formulated a five-year plan, ending 2010, to sell land parcels for housing, research institutions, hospital and colleges.

"While it is difficult to attract people to come here, we are saying that the cost is lower to operate in Cyberjaya. We are already seeing a number of big names establishing a base here," Lao said.

Setia Haruman is promoting the digital city with other stakeholders - Multimedia Development Corp (MDeC), Sepang City Council and Cyberview Sdn Bhd - to ensure its sustainability.

"The driver for Cyberjaya is the government's investment through MDeC in bringing information technology companies here," Lao added.

By New Straits Times (by Sharen Kaur)

Plenitude Q4 profit jumps on strong property sales

PLENITUDE Bhd increased its net profit by 15 per cent to RM24.5 million in the fourth quarter compared with the same period last year, as it sold more properties.

For the current year ending June 2009, the group is fairly optimistic it will record satisfactory results as it aims to complete ongoing projects on time.

"Plenitude's good performances and growth over the years are testament to our dedication and commitment in providing high quality products and services to our customers," it said in a statement yesterday.

For the three months to June 30 2008, Plenitude's revenue jumped 43 per cent to RM129.6 million from RM90.8 million before.

Revenue was driven by impressive sales of properties in Taman Desa Tebrau in Johor, Taman Putra Prima in Selangor, Bandar Perdana and Lot 88 in Kedah, The Residences of Changkat Kiara and Changkat View Condominium in Sri Hartamas, Kuala Lumpur.

In the same period, earnings per share also increased to 18.21 sen from 15.84 sen.

For the 12-month period, the company achieved a net profit of RM78.71 million, a 39 per cent jump from 2007.

Revenue improved by 46 per cent to RM347.84 million.

"The response to our launches in the year under review have been very good and we will work hard to ensure that our future launches will receive equal, if not better, responses," said its executive chairman Chua Elsie.

CHUA: The response to our launches in the year under review have been good.

Apart from the profit contributed from property development projects, Plenitude's hotel in Penang , the Tanjung Bungah Beach Hotel, also contributed 0.3 per cent to the group's net profit.

By New Straits Times

Tanjong to build holiday homes in Germany

TANJONG plc has signed an agreement yesterday to develop about 2,000 holiday homes at its Tropical Islands resort in Germany.

Under the agreement, Eske Group A/S will finance development of the vacation home project while Novasol A/S will have the exclusive marketing rights.

Tropical Islands is a holiday resort, located within the world's largest freestanding dome in Germany, developed by Tropical Island Holding GmbH Group, a subsidiary of Tanjong.

The development of 500ha of land will be carried out over three phases.

The first stage comprises construction of 375 units over 30ha which is expected to be ready for occupation in 2010.

Tanjong is not expected to assume nor commit to any financial obligation in respect of the construction and development of the vacation homes.

Tanjong's chairman Datuk Robert Cheim said the involvement of the Eske Group and Novasol will surely contribute to the successful development of Tropical Islands.

"The availability of resort accommodation facilities will help Tropical Islands attract a greater number of visitors from the fast-growing European vacation market, and should expand its current public profile which compromises largely day-trippers. This will place the resort in a much better position to generate greater revenue in the longer term," he said.

By New Straits Times

Hektar REIT posts double-digit Q2 profit growth

HEKTAR REIT, a retail mall property trust with more than RM700 million worth of properties including the Subang Parade shopping complex in Selangor, saw its net profit and revenue grow double-digit in the second quarter of this year.

This was helped by high occupancy rates and positive rental reversions, Hektar Asset Management Sdn Bhd chief executive officer Datuk Jaafar Abdul Hamid said.

"Hektar REIT's net profit grew 10.9 per cent year-on-year to RM9.4 million in the second quarter ended June 30 this year," Jaafar said in an email.

Revenue edged up 15.6 per cent to RM20.9 million, against RM18.06 million in the same period last year.

"Our second quarter results performed according to our expectations. Our shopping centres continue to record high occupancies and rental reversions remain positive.

"Over one million Malaysians live within 15 minutes' drive time of our shopping centres," Jaafar said.

Total occupancy of the shopping centres, he said, improved 97.4 per cent with Subang Parade reaching full occupancy.

Rental reversions remained positive, with 17 new or renewed tenancies recording an average increase of 11 per cent over previous rental rates.

A second quarter dividend of 2.4 sen per unit was declared.

Based on the closing price of RM1.25 on August 12, this represents an annualised yield of 7.7 per cent.

Hektar REIT, listed on Bursa Malaysia's main board in December 2006, aims to distribute 90 per cent of the actual net income for 2008.

By New Straits Times (by Zuraimi Abdullah)

Malbex 2008 to feature cost-effective building systems

COMPANIES are finding smarter ways to construct buildings and the upcoming Malaysian International Building Exposition (Malbex 2008) will feature them.

Two of these home-grown companies are Innovative Precast Builders Sdn Bhd (IPB) and Soils Dynamics (M) Sdn Bhd.

IPB makes an environment-friendly industrial building system (IBS), a patented wall system that will be showcased to local and foreign industry players at the trade show.

IPB director Loo Lee Kam said the wall system allows any building to be completed faster, thus saving on labour cost.

"The cost-saving is about 10 per cent and the price is about the same or cheaper than the conventional product because we save on the mould. The product is also 30 per cent lighter than the conventional one because it doesn't require mortar and plastering, or even cranes," he told Business Times in an interview in Petaling Jaya recently.

Developed locally, the IPB wall system is an engineered concrete block system for structural and non-structural wall application. The concrete block sizes and weight are designed for manual handling.

Chew said the product is flexible as it can be used in the construction of any building, house extension or retaining wall.

Soils Dynamics will be promoting its Bi-Directional Static Load Test system at Malbex 2008.

Soils Dynamics operations manager Yii Toh Leong said the method could help save up to 30 per cent of costs.

Developed locally, the system, which has been introduced in the market since 1990, is widely adopted in the US, Europe and Asia.

Malbex 2008 will be held from August 26 to 29 at the Kuala Lumpur Convention Centre.

By New Straits Times (by Hamisah Hamid)

Dream Living in Kiaraville

Property developer Lai Siew Wah, group managing director of Ireka Corp, is so happy with his Kiaraville condominium development in Mont’ Kiara that he has retained a few units for himself.

In fact, Lai’s children as well as other directors of the joint-venture development have all bought units, mainly as investments. However, Lai and one of the joint-venture directors, who is also chief executive officer of a public-listed company, have furnished and moved into their units.

Lai has a penthouse in one of the high-rise towers but because his wife didn’t fancy walking up and down the huge duplex unit, he has opted to stay in one of two adjoining units in a low-rise block. The other unit is meant for visiting friends and relatives.

Kiaraville is known for its two landmark bronze sculptures worth RM2mil sited at the entrance plaza. The two rotund figures of musicians were created by New York-based Malaysian artist Eng Tay.

Sited on 2.73 hectares (6.74 acres) of land, Kiaraville comprises Tower A with 33 storeys, Tower B with 28 storeys and Tower C with 18 storeys while the two remaining residential blocks are relatively low-rise with 10 and 13 storeys, respectively. The first few units were handed over in February this year. There are a total of 404 units.

Kiaraville is developed by Binaderas Sdn Bhd – owned by Lai and his family members – in collaboration with CapitaLand Financial Ltd and OCBC Bank.

The launch price in March 2005 was RM430 per square foot. To date, all the units have been sold. However, units recently transacted in the secondary market cost between RM550 and RM700 per square foot. The typical units range from 1,593sq ft to 3,935sq ft. Maintenance fee is 25 sen per square foot inclusive of sinking fund contribution. Lai’s own two adjoining units are on Level 1 and have great views of the swimming pools and the landscaped plaza. One of his units, featured on these pages, spans 3,954 sq ft.

As a relatively high-end condo development, imported marble is used as the flooring material in the foyer as well as the living and dining rooms. Bedrooms have “pre-engineered timber” flooring while the wet and dry kitchens come with homogenous tiles. The bathroom in the main bedroom and the powder room have granite floors while the other bathrooms have homogeneous tiles.

While the main construction features were left intact, Lai wanted a grander ambience for his own units. Thus, he spent “substantial resources” on timber panelling to build an apartment with a “stately feel”.

Privacy is assured as there are only two units on each floor of the residential block that Lai has chosen. There is also direct access from the private lift lobby of the condo units to the car park in the basement.

Other than the timber panels, nothing much else needed to be done to the units. Standard built-in features include cabinets in the dry and wet kitchens and wardrobe units in all bedrooms.

The bathroom in the master bedroom is similar to bathrooms of five-star hotels. It has a grand view of the landscaped plaza and pools.

Bathroom fittings include Hans Grohe shower sets in all bathrooms, especially in the master bedroom, which is equipped with a “Rain Dance” shower set. Sanitary ware fittings are from Toto.

Most of the furniture were either custom-built in Singapore according to specifications by the Singapore-based interior consultant. The brown lounge chair is from Baker Furniture imported from the US by a local store.

With the help of a design team from Design Stream, the interior was fitted out with imported furniture, including Baker from the US and FLOS lighting fixtures. Other furnishings were custom made in Singapore.

The furniture items can be described as in a “modern classic” style which won’t look outdated in a few years as design trend changes, says Lai’s personal assistant.

Contemporary Malaysian Art

When it comes to art works for his walls, Lai has become more adventurous in his taste. Of late, he has bought contemporary Malaysian paintings ever since an art gallery was set up in his other condominium development in Seni Mont’ Kiara.

Says Lai: “I sourced them from art shows in the SENI art gallery from time to time. The works include Ismail Latiff, Jolly Koh, Eng Tay and Jansen Chow.”

As the developer of Kiaraville, Lai is even more than happy to know that his buyers are renting out units that command quite good returns. The average rental rate is RM3.80 per square foot. And one of the units in his block has been rented out at RM15,000 per month.

And the company chairman expects the capital appreciation of prime condo units in Kiaraville to reach 50% to 70%.

By The Star

Friday, August 22, 2008

Selangor Dredging to launch projects worth RM1.2b

SELANGOR Dredging Bhd (SDB) will launch five projects worth some RM1.2 billion over the next 18 months but remains cautious about demand.

It hopes to do better than fiscal 2008 but admits that this will be a challenge due to the tough business conditions.

SDB made a fourfold increase in net profit to RM97.1 million for fiscal year March 31 2008.

"In terms of profitability we are there. It is a question of sustaining current profits or whether we could achieve higher," chairman Eddy Chieng Ing Huong said after the company's shareholders' meeting in Kuala Lumpur yesterday.

For the first quarter to June 30, it made a net profit of RM7.03 million, 19 per cent down from the same quarter last year.

"Currently, the outlook is uncertain. We do have properties which are sold and sales are locked in so we will continue to recognise profits," he said.

SDB, which now has three projects worth RM520 million, will remain "cautiously optimistic" of its new launches.

It will launch 248 Jalan Ampang, a RM160 million low-rise condominium development in December and a RM260 million high-rise condominium project at Gilstead Road, Singapore, early 2009.

It will also launch a gated bungalow project in Taman Melati, Kuala Lumpur, phase 2 of Ameera residences in Petaling Jaya, and the controversial Damansara 21 in Damansara Heights, where it plans to build 21 luxury bungalows on a hill slope in the second half of next year.

Managing director Teh Lip Kim said SDB will stagger the launches if there is an economic downturn.

TEH: We will stagger them if there is a downturn

"We need to be flexible. We are experiencing a slowdown in demand and are affected by contractors asking us for revision of cost.

"We are exploring ways to buy steel from stockist and deliver on site for the contractors to use to keep the cost down. We are also leveraging on our financial capabilities to see how we can manage cost," she said.

By New Straits Times (by Sharen Kaur)

Selangor Dredging takes cautious in launching property projects

KUALA LUMPUR: Selangor Dredging Bhd (SDB) will be more cautious in launching property projects due to uncertainties in the market, says chairman Eddy Chieng.

“We have about five developments in the pipeline and will launch them in a staggered manner. We are cautious but still confident of attracting buyers,” Chieng said after the company AGM yesterday.

He added that based on its track record, SDB would be able to sell properties at “respectable” prices.

“Though we are quite new in property development, the quality of the residences that we built has satisfied buyers. We will continue to build high quality residences, focusing on niche market,” Chieng said.

Managing director Teh Lip Kim said the group’s landbank was in various strategic locations in the Klang Valley. However, SDB was very selective in developing its land.

“If we launch all the projects now, we will have no more land in our possession. So we need to think carefully when developing our land to get the best results,” she said.

Teh said the group would launch a development at 248 Jalan Ampang by year-end. The 38-unit low-rise condominium project is forecast to have a gross sales value of RM160mil.

Currently, SDB is developing 20trees, a 23-acre mixed development at Taman Melawati, and the 290-unit Ameera condominium in SS2, Petaling Jaya.

The group is also developing a 22-unit low-rise condominium called Jia in Wilkie Road, Singapore.

SDB is involved in property development, leasing and hotel operation. The group is now focusing on the local and Singapore markets.

By The Star

Magna Prima H1 net leaps 103pc

MALAYSIAN property development and construction company Magna Prima Bhd (MPB) has reported a 77.16 per cent increase in pre-tax profit to RM19.17 million for its second quarter ended June 30, 2008.

In a statement yesterday, it said the creditable performance was driven largely by its ongoing projects in the Klang Valley, namely Dataran Otomobil in Shah Alam, U1 Shah Alam and Magna Ville in Selayang.

The group also posted a 48.68 per cent year-on-year increase in revenue amounting to RM133.8 million from RM90.02 million in the corresponding period last year.

Net profit for the first half of this year also leapt by 103 per cent to RM13.8 million while basic earnings per share increased to 25.78 sen from 12.04 sen.

The company’s outstanding financial performance saw it emerge the overall winner of the KPMG Shareholder Value Award 2007 for the general construction sector.

For the financial year ended December 2007, MPB declared a final dividend of seven sen per share, and recorded a return on equity of 30 per cent.

“Going forward, we are determined to move full steam ahead in our endeavours as a progressive lifestyle property developer and construction company,” said Lim Ching Choy, the MPB executive director and chief executive officer.

By Bernama

New SC measures to boost REITs industry

PETALING JAYA: The Securities Commission (SC) has introduced several new measures to boost the growth of real estate investment trusts (REITs) including allowing the acquisition of uncompleted buildings.

The SC, in its revised REITs guidelines which came into effect yesterday, stated that REITs would be only allowed to acquire property under construction or uncompleted real estates up to 10% of their total asset value.

REITs cannot acquire non-income generating real estates such as vacant land.

Other measures were more freedom for REIT managers to invest in foreign real estate and also allowing a portion of a REIT’s portfolio to consist of properties it does not wholly own or have majority ownership.

The SC also said REIT managers had to appoint a designated person responsible for compliance. This is to ensure that securities laws, land laws and guidelines and rules are complied with at all times.

On the issue of units for cash (other than rights issue), the SC said the number of units to be issued must not exceed 20% of the approved fund size while the placement to one single placee must not exceed 10% of the approved fund size.

The SC said the various measures were to enhance the attractiveness of Bursa Malaysia as a destination for REIT listings and promote a vibrant and competitive REIT industry domestically and regionally.

Am ARA REIT Managers Sdn Bhd chief executive officer Lim Yoon Peng told StarBiz that the SC approval for REITS to acquire partially completed building was a good move as the REIT could participate in the construction also.

“A REIT will be able to buy assets at a lower price. Also since there is a contracted tenant, a REIT can obtain higher yield,” he said.

Lim said all Malaysian REITs focused on local buildings rather than those overseas where the risks could be higher.

Axis REIT Managers Bhd chief operating officer Stewart LaBrooy said the SC’s move to enhance corporate governance among REITs, including the setting up of internal auditors and the harmonising of the rules for REITs was good.

However, he was concerned about the SC’s conditions for issuance of units for cash other than rights issues.

“This could hinder the capital raising exercises of smaller REITs whose fund size is less than RM100mil. However, this ruling would not have an effect on the larger players,” he said.

By The Star (by Joseph Chin)